The following data are related to a small manufacturing Co.: Fixed cost ₹1,60,000 Variable cost 60% of sales Calculate: (1) P/V Ratio (2) Break-even Point (B.E.P.) (3) Sales required to earn a profit of ₹20,000 (4) Profi

(1) P/V Ratio = 1 - Variable Cost Ratio = 1 - 60% = 40% (2) Break Even Point = Fixed Cost / P/V Ratio = 1,60,000 / 40% = ₹4,00,000 (3) Sales required to earn a profit of ₹20,000 Sales = Fixed Cost + Desired Profit / P/V Ratio = 1,60,000 + 20,000 / 40% = ₹4,50,000 (4) Profit at an estimated sales of ₹4,40,000 Profit = Sales * P/V Ratio - Fixed Cost = (4,40,000 * 40/100) - 1,60,000 = 1,76,000 - 1,60,000 = ₹16,000 (5) Margin of Safety when sales are ₹8,00,000 Sales - B.E.P. = 8,00,000 - 4,00,000 = ₹4,00,000